Essay
East-West Airlines is planning on leasing an aircraft. East-West does not receive title to the aircraft during or at the end of the lease period. Also, the lease does not contain a bargain purchase option. Using the lease information shown below indicate whether the lease is a capital lease or an operating lease and explain why.
Type of property - Aircraft
Yearly rental - $9,500,000
Lease term - 15 years
Estimated economic life - 25 years
Fair market value of the leased asset - $85,000,000
Present value of lease rental payments - $77,000,000
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This lease is a capital lease,...View Answer
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Correct Answer:
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